The Prudent Life Series: The January Effect

The Prudent Life Series: The January Effect
November 15, 2016 Ijeoma Madueke

By Ijeoma Madueke

The January Effect in finance is the seasonal rally of stock prices upwards during the month of January. This is typically attributed to the after-effect of stock sell-off in December when the investors look to realize capital gains.

Alright, finance jargon aside, the January Effect I am addressing is the tendency to be extremely broke in January following over-spending during the Christmas holiday season.

Sound familiar? The inherent tendency to spend in the holly season on things you need and/or want for yourself, family and friends is the cause of plenty-a-tough times for merry makers across the globe.

In your walk to financial freedom, a healthy spoonful of reality is needed. Christmas is a time to be merry but remember, it is really just one day! Is this one day enough to ruin the next few months of your year? Here are a few quick antidotes for the January Effect:

Start Saving Early

It is a little too late for this now but if you have not already – you have a couple of paychecks to stock up for the holiday season. The expenses tend to tumble in, so you have to be armed and ready to pay up.

Shop NOW!

Christmas lights and trees are popping up everywhere – so before everyone remembers it’s almost Christmas, run over to the stores and clear your own shelves. Stock up only the non-perishables of course.

Make A List and Check It Twice

Super tempting as it may be, you cannot and should not buy gifts for every special person in your life. You are not Santa Claus after all and he too checks his list for who is naughty and who is nice. So comb through and scale down on gifts for a few special people; but for other loved ones – a card may just have to suffice.


Wait a minute! Do not run off and burn you house down baking some Christmas cake if it is not your thing. Start small on the things you can get done by yourself – like your hampers. You see all those ready-made hampers that line the aisles? Run from them! Those tempting goodies are typically over-priced and far from personalized. Put your own things together as it will be cheaper and more thoughtful.

Embrace the Potluck

So I understand that you have a large heart and would like to feed all your guests this merry season. However, you need to check if you’ve got it to spare. One strategy of hosting a wholesome party is having everyone bringing something to the table. You can focus on the Christmas Turkey and main dishes while your guests can stroll in with other goodies. To make it more palatable, here’s an idea – make it a cook-off competition. Everyone loves a good competition.

Book Your Tickets Early

Last and definitely not the least. If you plan to head out of town – buy your tickets now! Avoid the Christmas rush and expected inflated prices.

Try to do these simple things so that when January comes and you have got some extra cash in your pocket or purse, you will look back and smile. Thank me later!

Prudent Tip of the Week: Do Not Be Merry With Your Money!

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